Data Analysis

Welcome to the WhatTheyThink data analysis section. As a service to the printing and publishing industries, WhatTheyThink provides access to economic, trend and other data that is valuable to industry executives for strategic planning and other purposes. This is also an excellent way for industry executives to stay current with the latest trends. This includes proprietary data developed by our own Dr. Joe Webb, Director of the WhatTheyThink economics and research center, as well as data from a variety of partner sources.

The following charts show how job openings have been on a steady rise since the beginning of the recovery in mid-2009, and have now passed the recent peak when the recession began at the end of 2007. But that was a long time ago, and population has grown since that time. The 2000s have a long way to go to catch up with population-adjusted job openings since the turn of the century.

For those who have been following along, the chart below is the latest update for budget planning. It's always a benefit to understand your sales and costs in historical perspective. Without adjusting for inflation, you could be working on assumption of trends and relationships that are untrue. Make it “real.”

The number of workers with full time jobs has still not exceeded levels at the start of the recession about seven years ago. This is despite continuous population growth and higher GDP levels for 21 of the last 22 quarters. Of last year's +2.2 million increase in employment, about 970,000 were part time positions. Many part time positions are by choice of the employee, an unknown number may be from distortions resulting from the implementation of the Affordable Care Act, and others are from uneven economic conditions and low expectations about future business conditions. There is some employment optimism in recent surveys of the National Federation of Independent Business and both the manufacturing and non-manufacturing surveys of the Institute for Supply Management.

Economic press coverage of the Federal budget is usually limited to the annual deficit, the shortfall of tax and fee collections versus spending. While the deficit as a percentage of GDP is down to about -4% from 2009 when it was more than -9%, the deficits do accumulate. Now, the total debt of the US exceeds GDP. This is likely to keep political pressure on the Fed to keep rates down. It also means that a 1 percentage point rise in interest rates would cost $180 billion and can double the annual deficit. But the Fed may not be able to increase interest rates when they want to no how hard they might try. International rates, such as those in Germany, have recently been below 0.5% for the 10 year bond. US rates are comparatively high in the 2% range, and any push upward by the Fed would probably be met by arbitrage actions in the other direction.

Four billion dollars was the approximate bottom of 2005's inflation adjusted annual profits. The four-quarter total annual profits have had a difficult time breaking through that level for more than eight years.

GDP may say that the recession ended in June 2009, but there are still data series that have not yet confirmed that five years later. Total employment is one of them, as is median household income, but so is the inflation-adjusted sales of companies in the S&P 500. Even though the companies in the S&P 500 index have revenues lower than the peak of June 2008, the S&P 500 stock index is getting closer to all-time high levels of Spring 2000 (The Dow Jones average already is, the Russell 2000 has been for a while, but the NASDAQ is still off by about 15%). These sales of 500 of the world's best companies have not kept up with real GDP growth since the recession ended (about 2% per year). Some economists believe that this is an indication that GDP data should be viewed with great suspicion, and that there has yet to be a true recovery.

Third quarter GDP was revised from +3.5% to +3.9%, but the change was mainly in net inventories, and did little to affect the assessment of underlying and longer range growth compared to the prior year of about +2.43%. Inventories have been bouncing around a bit over recent quarters and are running a little higher than they should be, indicating that some minor correction is forthcoming, especially if non-US economies are slowing down.

Using printing shipments and population data from Statistics Canada, we have prepared this chart that shows per capita shipments of commercial printing in Canada current dollars and Canada inflation-adjusted dollars.

What's made the economic recovery since June 2009 so intriguing has not been its below-history GDP growth rate, but also the deterioration in key measures of employment. The labor force participation rate has been declining as idled workers decide not to return to the workforce.

There's been a lot of interest in the stronger dollar for many reasons. Some consider it a safe haven during times of global tensions. Others say it's a bounce off a bottom. Still others consider the dollar the least ugly of all the major currencies. But is it really stronger? (Two charts)

The latest data from the Commerce Department's Quarterly Service Survey shows that advertising agency revenues have climbed at the rate of 7% per year since the recovery began after June 2009. The rate of growth exceeds real GDP growth which has been +2.2% on an annual basis since that time. How did they do it? A strong emphasis on digital media strategy and production that's replaced their loss of commissions and fees for broadcast and print advertising. Publishers revenues have not come close to even that lackluster GDP rate. The steep decline for magazines and books is over, for now: they are not growing and the decline in revenues is mild. Newspapers, however, are still in long term decline. Newspaper revenues are about half of what the were in 2004.

Small business seems to be improving, at least according to the NFIB monthly survey of small business owners. For years, it was usually trapped between two recession bottoms, but it has broken through of three consecutive surveys. It's an encouraging report, but it's not bullish. The NFIB commentary states “More owners still think business conditions will be worse in six months than think they will be better. Few see the current period as a good time to expand. The outlook for improvements in real sales volumes faded. Interest in borrowing continues to remain at record low levels; owners are satisfied with inventories and aren’t planning a lot of investment.” The NFIB is still in the range of a 2+% GDP growth level, but sees not robust small business activity in the near term. Basically, the NFIB report is good news in that conditions are better, but a big positive breakout in activity will remain elusive.

Second quarter US commercial printing profits were $1.13 billion, based on the recent Quarterly Financial Report issued by the Department of Commerce and combined with other Commerce Department and Bureau of Labor Statistics data. This was down -7.5% compared to Q2-2013. For the last four quarters, total profits were $3.67 billion, and that is +20% higher than the equivalent measure a year ago. The Q1 four-quarter moving total was revised down from $4.03 billion to $3.77 billion.

The Fed has been in unchartered territory with its post-2008 actions, and unwinding them may take a bit of creativity. One of their obstacles might be the rates of long term government bonds around the world. The chart below shows the yield of 10-year bonds earlier this week. The rate on US 10-year bonds is more than 4x Japan's and more than 2x Germany's. In an odd situation, US bonds are actually paying less than those of Spain. Global investors looking for yield (pension funds, governments, mutual funds, and others) may thwart Fed actions by finding US funds to be compelling deals on a relative basis. The Fed can usually affect only short term rates, which was one of the reasons they became aggressive in buying long term debt in their Quantitative Easing (QE) actions. Getting yields down for all durations is what made their actions were essentially unprecedented for the US. If they attempt to sell their holdings quickly to raise rates, there might be more buyers than they anticipate, making the action fruitless. It still looks like once the QE buying is done in the next few weeks the Fed will simply let their most of their holdings mature rather than force-feed them to the market. Listen for the word “macroprudential” in the next months. That's how Fed officials are describing the gentle prodding they may have to take to reverse their course. It turns out that some of the Fed members are worried their actions may encounter resistance, so they will resort to some arm-twisting to push banks to act in the manner they want. That hasn't worked well in the past, and it probably won't work well now, but it does add a word to our vocabulary.

Commercial and industrial loans took a while to start growing again, almost two years after the recovery started. Loans now total $1.7 trillion, the highest amount in the history of the data series, a little more than 10% of GDP. Overall, they are up about 40% on a current dollar basis since mid-2010.

As the number of employed workers has been slowly increasing, and the total workforce has been growing, initial claims for unemployment have been decreasing. The historical perspective is very interesting. This past recession, as bad as it was, did not come close to the levels of the 1970s and 1980s recessions (about 0.6% of the workforce). This most recent recovery is already at the best levels of prior expansions. It doesn't feel “that good”; what's different? The workforce has not kept up with population growth, and about 2 million workers have permanently left the workforce. Also, companies have been cautious in their hiring, meaning, that there are fewer workers to dismiss when businesses of the past needed to. One could look at the chart and say that when this ratio reaches this current level (0.2%) a recession has always followed. Probably not in this case: this ratio may go to unprecedented lower levels because of the workforce exodus and the slow pace of hiring that has made this recovery so different than previous ones. Economist Mark Perry at the American Enterprise Institute discussed the steady rise in job openings at his blog. They are at a 13-year high (not adjusted for population growth), and still less than January 2000 by 800,000.

The NFIB index has been trapped between the bottom of two recessions, that of the early 1990s and the early 2000s recession bottom. Though the latest report retreated a bit, it's still above the 2003 low. Small business is improving at a very slow pace, but this may finally be a good sign after the very disappointing Q1 GDP report.

The recovery indicators were mainly better this month, with the NASDAQ bouncing around then finishing well, and three of the four ISM indicators increasing. The one that didn’t is still firmly in expansion territory. The original estimate of proprietors’ income was $1,371 then it was reduced to $1,366 billion and now it’s $1,359.